
J.C. Penney Tries to Reassure Investors, But Stock Still Gets Crushed
Investors didn't warm up to J.C. Penney's (JCP) - Get Report better-than-expected third quarter and upbeat commentary on business trends weeks before the holiday season kicks into gear.
Instead, shares of the department store retailer plunged as much as 16% on Friday as investors zeroed in on another loss for J.C. Penney despite a strong quarter of sales. J.C. Penney's stock likely also got swept into the negative sentiment surrounding the department store sector this week, following disappointing results from Macy's (M) - Get Report and Nordstrom (JWN) - Get Report that crushed each company's stock.
Although the company has been doing better lately, a default on its high levels of debt remains a possibility, according to The Deal's Richard Collings.
J.C. Penney CEO Marvin Ellison sought to allay Wall Street's concerns that the business was in trouble, noting several times on a call with analysts the company took market share away from competitors. Moreover, Ellison struck an optimistic tone for the approaching holiday season, saying J.C. Penney will be better in stock than last year and be more aggressive with its marketing to win over deal-seeking customers.
TheStreet takes a look at three top takeaways.
1. Yet another loss for J.C. Penney, despite impressive sales growth.
Even as J.C. Penney reported a solid 6.4% same-store sales increase for the third quarter, trouncing rival Macy's (M) - Get Report 3.6% drop, the company continued to be in the red. The adjusted loss per share tallied 47 cents a share, beating forecasts for a loss of 56 cents a share. For the nine months ended Oct. 31, J.C. Penney's adjusted loss amounted to $1.45 a share, with same-store sales up 4.6%.
2. J.C. Penney had a solid quarter in most areas of its business.
According to J.C. Penney, all of its merchandise divisions logged same-store sales increases year-over-year. The best-performing divisions included men's, home, footwear, handbags, and Sephora cosmetics. Ellison mentioned the children's business improved "significantly", while online sales growth was stronger than it was in the second quarter, as the company expanded the number of items available and improved its checkout speed.
3. J.C. Penney stores may look different after the holiday season.
J.C. Penney now has Sephora shops in 519 of its stores, after opening about 28 so far this year. Based on the success of the business, Ellison said he will look to "significantly" increase the number of J.C. Penney stores that have a Sephora shop in 2016.
And after the holiday season, J.C. Penney plans to upgrade the shopping environment for handbags, footwear and jewelry at about 350 locations, according to Ellison. New fixtures and layouts will likely be seen as J.C. Penney tries to drive improved sales per square foot.








